China is More Prone to Financial Crimes by Terrorists - PBOC Official

A financial expert said China is at a greater risk of fighting financial crimes and must immediately take measures to counter the problem (Photo : Getty Images)

China is at a higher risk of being penetrated by criminal activities in its financial sector such as money laundering and financing of terrorist groups as it comes closer to being integrated into global markets, a high-ranking bank official warned on Tuesday.

"Risks of money laundering and terrorist financing are further increasing in line with cross-border uses of the yuan, the rise of internet financing and the opening of capital accounts," said Hao Jinghua, deputy director of the anti-money laundering bureau of the People's Bank of China.

Hao, who spoke before the meeting of top anti-money laundering experts, said China has been under pressure to take more measures in its fight against criminals involved in financial operations.

Hao emphasized that fighting financial crimes is no longer an issue of finance or economics but it has reached the core of social stability and worse, has threatened national security.

Settlement currency

An anti-money laundering expert said Beijing has become prone to financial criminal activities as the wider use of yuan as settlement exchange in global markets has increased.

Also, the specialist said the risk is greater now for Beijing with the yuan being used as transaction currency by criminal groups most often than not.

"As China is becoming more opening, the anti-money laundering and criminal financing has expanded to more areas, from financial frauds to human trafficking and smuggling," the expert said.

China must fight financial criminality being committed by terrorists and counter the challenge created by terrorist financing.

Remittance services

Financial and law enforcement officials joined forces in tracking down suspected terrorists who have been doing business as a front at the coastal areas of Beijing such as Yangtze and Pearl River deltas.

These terrorists who have been doing business in China are able to use underground banks and remittance services to transfer large amounts of money abroad to fund their terrorist activities.

Local terrorists in China, particularly in the Xinjiang region, reportedly use bank networks to send money to their relatives and to recruit more terrorists. Payments made through the internet is also quickly becoming the usual way to channel and filter funds for terrorism, experts pointed out.

The global crackdown on terrorism which was an offshoot of the 9/11 terrorist attacks in the US in 2001 carried with it the automatic cut off of the money supply to terrorists that was being used to fund their activities.

After the attacks, China had since enacted anti-money laundering laws that have taken effect in 2007.